Canada’s Modern Slavery Legislation: A Look Back at the First Two Years of Reporting

As Canadian businesses move into the third year of mandatory modern slavery reporting,staying on top of the shifting compliance landscape has never been more critical. Norton Rose Fulbright (NRF) is proud to sponsor the Business and Human Rights Workshop, hosted by the UN Global Compact Network Canada. This event will provide attendees with practical,  hands-on guidance for strengthening their human rights due diligence frameworks. 

In preparation for this essential workshop, we spoke with NRF to discuss key trends from the first two years of reporting under Canada's Fighting Against Forced Labour and Child Labour in Supply Chains Act. We covered common pitfalls companies should avoid, and shared practical actions organizations  can take to demonstrate meaningful progress. 

Read on for valuable insights to help you prepare for the year ahead, and make sure to register for our Montreal workshop here for even more guidance.

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1. Could you share a brief overview of Norton Rose Fulbright’s work in Canada and your role in supporting responsible business practices?

Norton Rose Fulbright has extensive experience in advising clients on a diverse range of environmental, social and governance matters, both in Canada and globally. The experience of our multidisciplinary team includes trusted guidance on corporate governance, effective compliance programs, climate risk assessment and management, mandatory and voluntary sustainability disclosure, supply chain management issues (including human rights and compliance matters), navigating financial services regulations, sustainable finance, and managing high-stakes litigation. 

As concerns Canada’s modern slavery legislation, the Fighting Against Forced Labour and Child Labour in Supply Chains Act (“Act”) which came into force in May 2023, our firm has been at the forefront in helping companies across the country understand whether they fall within the scope of the Act, the reporting obligations under the Act and the policy and governance development, employee training and due diligence activities that can help mitigate the risk of modern slavery being present in their operations and supply chain. We have also participated in the taskforce established by Public Safety Canada, the ministry responsible for overseeing the Act, to help inform the government’s understanding of issues faced by companies in interpreting and complying with the Act, as well as the development of guidance in respect of the Act.

2. Norton Rose Fulbright has been conducting trend analysis on reporting under the Modern Slavery Act, which became mandatory in 2024. As companies prepare for their third round of disclosures in 2026, could you highlight any notable trends you have observed in how Canadian businesses are approaching reporting and compliance?

Norton Rose Fulbright has reviewed and assessed samples of the reports filed during the first two years of operation of the Act. Our findings are generally consistent with those of Public Safety Canada, which is required to advise Parliament annually on the risks of modern slavery and risk-mitigation activities identified by entities in their reports. Public Safety Canada submitted its second annual report to Parliament at the end of September 2025. Key findings include the following:

• Decrease in reporting: The government received a total of 4,178 reports from entities prior to the 2025 reporting deadline, down from 5,650 in 2024, representing a 26% decrease in the number of reports received year-over year. This is not unexpected, as Public Safety Canada clarified in November 2024 – after the first year of reporting – that entities that only sell or distribute goods, but do not otherwise import or produce goods, are exempt from reporting. As a result, a number of entities that had filed reports in 2024 appear to have determined that they are no longer required to do so.
• Progress in identifying risks: 83.4% of reporting entities indicated that they had identified parts of their activities and supply chains that carry a risk of forced labour or child labour being used, up from 77.6% in 2024. Only 16.6% of reporting entities stated that they had not started the process of identifying risks (down from 22.4% in 2024). The most common areas of identified risk related to the type of goods, the sector or industry and the location of the activities, operations or factories.
• Common approach of establishing policies and due diligence processes: The vast majority of reporting entities (84.1%) stated that they have policies and/or due diligence processes in place related to forced labour and/or child labour. Of those, almost all (96.6%) reported having embedded responsible business conduct into their policies and management systems. Far fewer – only 29.3% – reported tracking implementation and results of those policies and due diligence processes.
• Specialized approach with employee training: A majority of entities (61.7%) reported having provided training to employees on forced labour and/or child labour, which is a significant increase over the number that had done so in the prior year (only 44.4%). Interestingly, fewer entities made training mandatory for all employees as they did in the prior year, appearing to take a more nuanced approach this past year and make training mandatory for specific groups of employees, such as those responsible for making contracting or purchasing decisions. 
• Remediation requirements remain uncommon: Only a very small number of organizations reported having identified any forced labour or child labour in their activities or supply chains. 91% of reporting organizations indicated that questions related to the measures taken to remediate issues did not apply to them as they had not identified any instances of forced labour or child labour. As a result, only 5% of reporting organizations indicated that they have taken measures to remediate instances of modern slavery.
• Less common practice of assessing effectiveness: Only half of entities indicated that they had policies and procedures in place to assess their effectiveness of their activities (up from 43.5% in 2024). The most common step taken by such entities was to regularly review internal policies and procedures (76%). Far less common was tracking relevant performance indicators (37.4%) or partnering with an external organization to conduct an independent review or audit (23.9%).

3. What common mistakes do businesses make when preparing Modern Slavery Act disclosures, and how can they avoid them?

Overpromises and overstatements

One of the most common mistakes that companies make when preparing their modern slavery report is to overpromise the activities they will undertake to prevent and reduce the risk of forced labour and child labour in their operations and supply chains or to overstake the value and effectiveness of the activities they are undertaking. This is often done with good intentions, in an apparent effort to show that they take the issue of modern slavery seriously and are intent on taking steps to help eradicate it. However, the Canadian Act does not require companies to disclose the activities they intend to undertake in the future – rather, the requirement is to discuss the activities undertaken during the previous financial year. Public Safety Canada has stated in its guidance that entities are expected to report on “concrete actions” that they have undertaken, rather than making “purely aspirational statements”. It is interesting to note that a couple of years after the Australian government put in place similar supply chain transparency legislation, a number of academic and non-governmental organizations conducted a review of the filed reports and found widespread “overstatements”, with many companies having made what they referred to as “‘paper promises’ with little evidence of effective action in the areas most likely to improve conditions for workers”. The report went so far as to name and criticize specific companies. While we have not yet seen similar coverage of Canadian modern slavery reporting, there remains a similar risk of reputational harm.

Taking a one-size-fits-all approach

Another common mistake is to take a ‘one-size-fits-all’ approach to due diligence and mitigation efforts, rather than applying a risk-based lens. Taking a common approach for all suppliers, regardless of size, jurisdiction of operation and type of product or service supplied, puts unnecessary hardship on low-risk suppliers, while diverting corporate attention and resources away from areas of higher risk. A risk-based approach, on the other hand, focuses due diligence and mitigation efforts where they are most needed and can have the greatest impact. Under internationally recognized principles, including the United Nations Guiding Principles on Business and Human Rights, companies are encouraged to prioritize actions based on the severity and likelihood of human rights impacts. It is important to note that such a risk-based approach means focusing resources where the risk to people is greatest – such as workers who may be exposed to forced labour or child labour – rather than risks to the entity itself, like reputational or financial harm. 

4. Are there any recent government updates or guidelines that Canadian businesses should be aware of? 

Public Safety Canada first published guidance to help entities understand their reporting obligations under the Act back in December 2023. Since then, the guidance has been updated several times, with significant amendments made in November 2024 that clarified (among other things) the entities required to report under the Act.

More recently, the Canadian government, in collaboration with the governments of the United Kingdom and Australia, jointly introduced an optional template and related guidance designed to streamline compliance for entities that are subject to supply chain transparency requirements in multiple jurisdictions, by supporting the development of one report for all three jurisdictions. Six of the seven overarching requirements in the template align with those in the Canadian Act. The seventh – a description of any other information the organization considers relevant to the spirit and intent of the legislation – is not mandated under the Canadian Act but is included in the Australian legislation.

This new guidance is useful for Canadian entities even if they are not required to report in other jurisdictions, since it can be used as a guide for implementing good risk mitigation practices and to improving the quality of reporting. For each section of the report, the guidance specifies two levels of disclosure: “level 1” is the information that entities are required to disclose under the legislation in each country, while “level 2” sets out recommended information that entities may choose to disclose (in addition to the level 1 information) to demonstrate progress and leadership in supply chain transparency. Supply chains are often complex and issues of modern slavery well hidden, and governments with supply chain transparency legislation understand and expect that entities will make progress towards enhancing their visibility and governance over time. While not required by the legislation, “level 2” information is intended to help entities demonstrate continuous improvement and commitment to eliminating modern slavery in their supply chains. 

The template and guidance also encourage proportionate risk-based reporting. In other words, it makes clear that entities should be guided by the level of risk when determining their modern slavery-related risk mitigation activities and the level of detail needed to include in their report to provide transparency about those risks and activities.

5. What emerging risks or trends in supply chains, human rights, or modern slavery should they be anticipating over the next 3–5 years?

During the past two years, Public Safety Canada’s focus has been on promoting awareness of the new reporting obligations under the Act and conducting stakeholder engagement. As we move into the third year, we understand that the government’s focus will begin to shift more towards compliance and improvement in the quality of reporting. Under the Act, there are potential corrective measures, fines and other consequences for failing to report when required to do so, and while there have been no penalties imposed on any entities to date, we may begin to see such enforcement by the government.

Looking further into the future, there is still an open question as to whether the Canadian government will introduce mandatory due diligence legislation, similar to that in place in Europe and other jurisdictions. The Act is a form of reporting legislation, meaning that it mandates that in-scope entities prepare an annual report about the risk of forced labour and child labour in their operations and supply chains and the mitigating activities taken to reduce and prevent that risk. However, it does not mandate that entities take any particular steps to reduce their risks – merely that they report on the steps taken (if any). Mandatory due diligence legislation, on the other hand, would impose specific requirements to monitor and control supply chain risks. In the federal budgets of the past several years, the government signalled that such legislation would be forthcoming. In fact, we understand that the legislation was on the verge of being introduced when Parliament was prorogued at the beginning of 2025. It remains to be seen whether the current government will take such steps.

Regardless of whether Canada enacts mandatory due diligence legislation, we can expect the federal government to continue to monitor the reports filed under the Act and to reevaluate the effectiveness of the current legislation in a few years. The government is mandated under the provisions of the Act to table an annual report in both the House of Commons and Senate by September 30 of each year and to conduct a comprehensive review of the Act after its five-year anniversary.  

6. What are three key actions companies can take now to strengthen their modern slavery reporting and risk management?

To strengthen their modern slavery reporting and risk management, entities should focus their efforts on activities that help them better assess the extent of their risk and to measure their progress in addressing such risk. More specifically, three key actions that we recommend are supply chain due diligence and management, employee and contractor training and setting of key performance indicators.

Supply chain due diligence and management

In terms of better understanding the risks, the principle is quite simple – you cannot fix what you cannot see. The difficulty is that supply chains are often complex and lacking in transparency. To help with this, companies should review their supply chain due diligence and procurement practices. At one of the scale, supplier questionnaires can help companies identify areas of risk such as jurisdiction of origin of goods and supplier efforts to mitigate risks. At the other end, where areas of risk are already identified, companies can engage third parties to conduct supplier audits and onsite visits. Procurement efforts can also help with risk management. For example, companies can impose contractual obligations to comply with their supplier code of conduct and other terms and conditions in their contracts with key suppliers.

Training and education

Another important method of better understanding risks is to train those employees who interact with suppliers on the issues and risks of modern slavery. Training that helps employees understand the causes and indicators of forced labour and child labour can equip them to better spot potential issues and risks, and also to suggest contractual and other measures to mitigate those risks.

Measurement of progress

Finally, we suggest that companies identify key performance indicators to help measure and track their progress. If you do not measure the success of the steps that have been taken, it will be difficult to assess the extent to which progress is being made and whether the resources being expended are sufficient or are being deployed effectively. Examples of appropriate KPIs may include the proportion of suppliers that have completed due diligence questionnaires, the proportion of suppliers assessed to be of higher risk that have undergone second stage due diligence or auditing, the proportion of key supplier contracts with anti-modern slavery clauses and the proportion of relevant employees that have taken relevant training.

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Ready to take your organization's human rights due diligence to the next level? Join Norton Rose Fulbright and leading experts at our Business and Human Rights Workshop in Montreal, where you'll gain practical tools and actionable strategies for strengthening your modern slavery risk management. 

This workshop offers a valuable opportunity to engage directly with experts, share best practices with peers, and prepare for the third year of reporting under Canada's Act. Whether you're refining your existing approach or building your framework from the ground up, this session will equip you with the knowledge and resources to demonstrate meaningful progress.

Secure your spot today and connect with the community shaping responsible business practices in Canada.

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